Press Release

At The 9 in downtown Cleveland, $77 million refinancing comes a year early (photos)

  • December 15, 2015

By Michelle Jarboe, The Plain Dealer

CLEVELAND, Ohio – The strong downtown apartment market and brisk business at the Metropolitan hotel made it possible last month for the Geis Cos. to secure an early refinancing of portions of The 9 complex on East Ninth Street.

Property records show that JP Morgan Chase & Co. closed Nov. 23 on a $77 million loan covering the hotel, 104 high-end apartments upstairs and the project’s main parking garage on Ninth. The deal pares risk and locks in low interest rates for Geis. And it’s a further testament to high demand from people who want to live, dine, drink and visit downtown.

The transaction did not include the Heinen’s grocery store in the Cleveland Trust Rotunda or the apartments and offices in the neighboring building, to the east, at 1010 Euclid Ave.

Plain Dealer PictureThe loan is being bundled with other commercial mortgages and used to back bonds sold to investors, said Mark Vogel of RiverCore Capital, a Cleveland mortgage-banking firm that arranged the financing. Money from the refinancing paid off construction loans from a Huntington Bank-led group and a bridge loan – short-term financing – from Cleveland Development Advisors, a real-estate-focused arm of the Greater Cleveland Partnership, the local chamber of commerce.

“We are happy to get this done, and [it] shows the success of the project as a whole,” developer Greg Geis wrote in an email. “We thank the lenders that helped get the project completed and look forward to a successful relationship with our new lender.”

Apartments on the upper floors at the Marcel Breuer-designed tower are full. “Sometimes lenders and ratings agencies would come, and we couldn’t let them into an apartment because nothing was vacant,” Vogel said.

The 156-room hotel downstairs boasts an occupancy rate of 69 percent and charges an average daily rate of $212, based on its first year of operations.

Income from the Vault nightclub, in the Rotunda’s basement, and Azure, a rooftop lounge at the 1010 Euclid building, also factored into the refinancing because they’re considered to be hotel functions.

Kevin Brokaw, director of development for Streetsboro-based Geis, wouldn’t get into details about the property’s health, beyond saying that the Metropolitan is topping the competition.

“The apartments and the hotel are certainly performing to a point where it put us in a position to refinance out of the construction loan perhaps a year earlier than we had scheduled – which is a great indicator for the market,” he said.

“With each new project,” Brokaw added, “the market is gaining more credibility toward what I would say are loftier goals for the future. … And I think our ability to deliver the project in a short period of time put us at the front end of the market.”

Brothers Fred and Greg Geis bought the Ameritrust complex from Cuyahoga  County in February 2013 and launched into a $170 million revamp of long-vacant historic buildings at the key intersection of Ninth and Euclid Avenue. Most of the project debuted in September 2014, though Heinen’s didn’t open until early 2015.

It made sense to leave Heinen’s and the 1010 Euclid building, which includes lower-priced apartments, out of the refinancing because those projects involved federal New Markets Tax Credits, which complicated a transaction.

The refinancing also omitted a smaller parking structure, the old Oppman garage at 1016 Prospect Ave. That garage could be part of a future development site, though Greg Geis won’t discuss potential plans for that property.

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Flats East Bank developers refinance Ernst & Young Tower, securing $92 million loan from Citigroup

  • October 17, 2013

By Michelle Jarboe McFee, The Plain Dealer 

CLEVELAND, Ohio — The Wolstein family has refinanced the Ernst & Young Tower at the Flats East Bank project, securing a $92 million loan on the 18-floor office building that anchors a key redevelopment of the city’s downtown waterfront.

The deal, which closed Friday, provides the Wolstein GrouE&Yp and Fairmount Properties with cash to finish out the remaining offices. By refinancing, Scott Wolstein and his mother, Iris, were able to pay off higher-rate debt and eliminate some personal liability on loans for the project.

Citigroup supplied the mortgage, which replaced a construction loan from Wells Fargo and generated money to pay down a loan from the Ohio Carpenters’ Pension Fund. The Citi loan will be bundled with other commercial mortgages and used to back bonds that will be sold to investors.

“Anytime you bring $100 million of private capital into Cleveland from outside the city, I think it’s a pretty cool thing,” Wolstein said Wednesday.

The city’s first new private downtown office tower in two decades, the Ernst & Young building was valued at $145 million, or about $302 per rent-able square foot, said Mark Vogel of RiverCore Capital, a Cleveland mortgage banker who structured the transaction.

That’s a big number for Cleveland, but it’s based on rents that surpass $30 per square foot per year and deals with high-profile tenants including Ernst & Young (which recently started calling itself EY), law firm Tucker Ellis and the CBRE Group Inc. real estate brokerage.

“That’s coastal pricing,” Alec Pacella, managing partner of the NAI Daus real estate brokerage in Beachwood, said of the valuation of the tower. “That’s way over anything we’ve seen. … but I’m sure that in other markets, with buildings of similar quality, you could justify it all day long.”

It frees up capital from the family … that can be redeployed into the next phase of the project.

Between the tenants that have moved in and other deals in the works, the tower is roughly 90 percent full, Wolstein said.

The roster also includes OM Group, Northwestern Mutual,Wells Fargo and the Porter Wright law firm.

“We started working on the deal back in December, when the building had only three signed leases,” Vogel said. “It’s such a good piece of collateral that the lender was willing to make a loan when the building only had three tenants. When it reached 83 percent occupancy, we restructured the deal.”

The building still carries debt from the Cleveland International Fund, which amassed money from foreign investors seeking U.S. residency through a government visa program. The Wolsteins will finish paying off the Carpenters’ loan as the final tenants move in.

The refinancing did not include the Aloft hotel, a parking garage, restaurants and a fitness center in the first phase of the Flats project. The development, a Herculean effort coming out of the recession, required more than 30 sources of public and private financing and a hefty commitment — in the form of equity and personal guarantees — from the Wolsteins.

Putting new debt without personal liability on the tower “certainly helps us in the sense that it frees up capital from the family that would have otherwise had to go into the office building that can be redeployed into the next phase of the project,” Wolstein said.

He hopes to close a public-private financing deal within 60 days for the next wave of development. Updated plans for that second phase include 245 apartments, plus restaurants and entertainment venues.

Based on the success of the Ernst & Young Tower, the developers are considering another office project — a more modest building on another part of the site. But Wolstein said that building, which “requires more public support,” won’t happen on the same timeline as the apartments.

 

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K&D Group sells big Marsol apartment complex

  • May 21, 2013

Deal part of developer’s plan to focus on downtown, other areas

By STAN BULLARD
4:30 am, May 20, 2013

K&D Group, the big apartment developer and operator based in Willoughby, has shed its massive, six-tower Marsol Apartments complex in Mayfield Heights.

The new owner of the 980-suite property visible on the southeast side of the Interstate 271 and Mayfield Road interchange is an affiliate of Morgan Management of Rochester, N.Y. Morgan owns apartments through its Morgan Communities brand, and it also owns office buildings, self-storage properties and RV parks. The newly formed Morgan Marsol LLC holds the property, according to public records.

Morgan is no newcomer to Northeast Ohio. Morgan affiliates also own the Bingham Apartments in downtown Cleveland’s Warehouse District and the DeVille Apartments in Beachwood.

Cuyahoga County land records filed May 2 do not disclose a sale price because the companies swapped the limited liability corporations that own Marsol.

Doug Price, K&D Group CEO, said K&D traded the complex because it wants to reduce its exposure in some markets and invest in other areas, such as new downtown residential developments.

On Mayfield Road just east of the Marsol property, K&D owns Gates Mills Towers, a 1,000-suite property bordered by a forest in Mayfield Heights. Mr. Price said K&D plans to retain Gates Mills Towers and invest $3 million this year updating it.

Gates Mills Towers was last renovated when K&D bought it in 2004, the same year it paid $32 million for Marsol, according to county records.

“Timing is everything,” Mr. Price said, as investors have a strong appetite for apartments.

Mr. Price refused to say how much Morgan paid for the entity that owns Marsol.

However, K&D is clearly money ahead.

A $35 million loan from Citigroup Global Markets Corp. to Morgan — recorded the same day the Marsol transferred — indicates a higher value for the property, as the loan amount would not reflect the down payment the acquirer put into the transaction.

Mr. Price said K&D had the Marsol “selectively offered” by brokers Michael Barron and Dan Burkons of Marcus & Millichap’s Cleveland office, so it did not put the property in position to receive multiple offers.

Mr. Barron said the Marsol’s new operator plans to upgrade the complex with improvements inside and out.

Robert Morgan, founder of Morgan Communities, did not return two calls from Crain’s Cleveland Business last week.

The Marsol now is listed in Morgan’s portfolio on its website, www.morganmanagement.com.

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New Cuyahoga County Headquarters

  • May 5, 2013

Money Flow: RiverCore Capital Structures $75.5 Million Tax-Exempt Bond Financing for New Cuyahoga County Headquarters Building

  • Arranged $10 million “bridge loan” from Piper Jaffray to help acquire Ameritrust Complex
  • Facilitates county savings of $9.1 million annually
  • Vogel: “First of several high-impact deals” for RiverCore Capital

CLEVELAND, Ohio, May 2, 2013 –RiverCore Capital LLC, the leading Cleveland-based investment banking firm focused on complex real-estate financing, structured the $75.5 million tax-exempt bond-financing deal for the new Cuyahoga County Headquarters Building.

“We are very excited to help transform East 9th Street – a vital corridor in our city,” says Mark Vogel, founder/managing partner, RiverCore Capital. “This development marks the first of several high-impact deals for RiverCore Capital in downtown Cleveland. The county is set to lease 222,000 square feet annually at a cost of $6.7 million—or about $30 a square foot—over 26 years. About 750 county employees from eight buildings will move into the new headquarters building in July 2014.

“Freeing up eight county offices will save more than $9.1 million a year,” according to Vogel.

The transaction, completed through the Cleveland-Cuyahoga County Port Authority, which issued tax-exempt bonds for construction of the building, closed earlier this month. The county headquarters will replace the old P and H office buildings at East 9th and Prospect Avenue. Developer Greg Geis will construct and manage the headquarters, which the county will lease.

As part of the bond deal, the Port Authority took ownership of the P and H property and acted as a conduit by issuing tax-exempt lease revenue bonds that will be paid off using rent from the county. Investment bank Piper Jaffray & Co. was the underwriter for the bond transaction. Vogel also arranged a bridge loan from Piper Jaffray—which provided a $10 million short-term loan to the Geis entity funding the site’s acquisition—until the bond transaction settled.

The bond financing only applies to the county headquarters, located on 0.72 acres of a larger site involving the Ameritrust Tower and two parking structures.

Geis acquired the Ameritrust complex from Cuyahoga County in February 2013 for $27 million. The developer hopes to turn the complex, which includes the historic rotunda as well as the Ameritrust Tower designed by Marcel Breuer, into luxury apartments, a hotel and offices. The Port issuance is not involved in the broader project.

A second-generation family business, Geis is best known for suburban industrial projects. Since 2010, though, the Geis brothers have created a technology park in Cleveland’s Midtown neighborhood, invested in a troubled downtown condo tower and proposed building offices on 20 acres of city-owned land near the downtown lakefront.

According to Piper Jaffray executive Ryan Stefan, the bonds received a rating of “Aa2” from Moody’s and an “AA” rating from Standard & Poor’s.

About RiverCore Capital LLC

Founded in November 2012 by 15-year investment banking veteran Mark Vogel, RiverCore Capital specializes in structuring complex financings, such as mortgage/mezzanine debt financings, within the institutional real estate community. The firm has significant relationships with various property and mortgage REITs, equity capital organizations, pension funds, private equity hedge funds, advisory firms, CMBS lenders, master servicers, life insurance companies and commercial banks. Vogel’s lending relationships have resulted in various investments and financings for lifestyle centers, retail shopping centers and regional malls, office, multi-family, industrial, hotel and self-storage properties while facilitating acquisitions, joint ventures, reorganizations, asset optimizations, workouts, sale leasebacks and loan restructurings.

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Compass Self Storage buys another property in the Atlanta market

  • April 25, 2013

By STAN BULLARD

8:49 am, April 25, 2013

Compass Self Storage LLC, a member of the Cleveland-based Amsdell family of companies, has purchased a self-storage property in Conyers, Ga., that brings its portfolio to four miniwarehouses in the Atlanta market.

The property has more than 87,000 square feet of rental space. It joins a three-property portfolio in Atlanta that Compass acquired in January.

Amsdell did not disclose the seller or price paid for the latest acquisition, but it said the new property and the others in Atlanta are operated under its Compass brand name. Amsdell said the latest property was acquired by separate affiliates of Amsdell Group LLC and Compass Self Storage LLC.

The latest Georgia deal and a Memphis, Tenn., property that Amsdell acquired earlier this month bring to 20 the number of properties that Amsdell has acquired since March 2012.

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VOGEL FORMS NEW FIRM

  • January 31, 2013

NOTED INVESTMENT BANKER MARK VOGEL FORMS COMMERCIAL REAL ESTATE FINANCE FIRM, RIVERCORE CAPITAL 

Cleveland firm offers extensive industry experience, highly personalized service

   

Cleveland – January 29th, 2013Investment banking veteran Mark Vogel today announced the formation of RiverCore Capital, a commercial real estate financing firm based in downtown Cleveland.   The new firm offers a full spectrum of services in commercial real estate capital solutions ranging from senior debt placements to equity capital raises.

RiverCore Capital will provide an array of financial services to borrowers through its deep rooted lender network in commercial real estate including first mortgage/mezzanine debt financing and equity placements, joint ventures, reorganizations, asset optimizations, workouts, leasebacks and loan sales.

Vogel has nearly 15 years of experience working on a variety of commercial projects in Northeast Ohio involving billions of dollars. He has a sophisticated understanding of capital markets and profound relationships in the financial real estate communities.  He has advised and worked with real estate developers, hedge fund managers, Wall Street CMBS banks, advisory firms, life insurance companies, commercial banks, pension funds and many other entities involved in commercial real estate.

“I’ve been lucky to work with some very smart people on some exceptional projects, and I’m grateful for the relationships I’ve developed,” Vogel said.  “I look forward to continuing those relationships in a new capacity at RiverCore.  The timing was right to form my own boutique firm that will offer a highly personalized experience and help our clients structure deals even in the most complex transactions.  RiverCore Capital will bring financial acumen, high energy and creativity to lenders and borrowers alike to help them achieve their strategic and financial objectives.”

Mark most recently spent 10 years at Pinnacle Financial Group, where he consummated dozens of transactions totaling more than $1.5 billion involving senior and mezzanine debt, joint venture, equity and leasebacks. His experience includes capital transactions and financing for Geis Companies, The Wolstein Family, Amsdell Companies, First Interstate Properties, and many other experienced borrowers.  He has played key roles in a number of high-profile, substantial projects in Cleveland including Cleveland Clinic’s acquisition of Marymount Hospital, Optima Ventures acquisition and refinancing of One Cleveland Center and the Penton Media Building and the refinancing of US Bank Centre.

Prior to that, Vogel was a financial consultant with Merrill Lynch where he developed and sold a $430 million account base of institutional and local high net worth retail clients.

Mark has earned his degree in Economics and History from The Ohio State University.

 

Contact Mark Vogel at RiverCore Capital, 216-621-9000 or mjv@rivercorecapital.com

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